Chinese group to sell stake in Lenovo parent

/ Source: The Associated Press

A Chinese science group is offering to sell part of its controlling stake in the parent of Lenovo Group, the world's fourth-largest personal computer maker, but with restrictions imposed on what can be done with the shares.

The Chinese Academy of Sciences wants 2.8 billion yuan ($408.8 million) for 29 percent of Legend Holdings, according to an announcement issued through the Beijing Equity Exchange, a financial firm.

The academy will remain Legend's key shareholder with a 36 percent stake after the sale and the buyer must agree not to alter management or strategy for five years, the announcement said. Legend says the remaining shares are owned by its employees.

The announcement gave no reason for the sale and an academy spokesman did not respond to phone messages. But the newspaper China Business News said the academy is reducing its stakes in the nearly 500 companies that it owns in an effort to improve management.

Lenovo and other PC makers have struggled with weak demand due to the global economic downturn.

The buyer must have operations in finance, energy and real estate, said the announcement, dated Friday. It said the academy wants to sell to a single buyer and will hold an auction if there is more than one bidder after the offer closes Sept. 3.

Lenovo was founded as Legend Computers in 1984 by a group of 12 researchers including Liu Chuanzhi. It adopted the Lenovo name in 2003 and became a global PC maker in 2005 with its acquisition of IBM Corp.'s PC unit.

Liu returned as Lenovo chairman in February in a shuffle that saw American CEO William J. Amelio depart after a three-year stint. Amelio was succeeded by Yang Yuanqing, who had been chairman.

Legend Holdings owns 42.3 percent of Lenovo Group, while 50.4 percent is held by public shareholders and the rest is owned by its directors and investment funds.

Lenovo, based in Beijing and in Morrisville, North Carolina, reported a $16 million loss for the quarter that ended June 30. But that was an improvement over the previous quarter's $264 million loss, and Lenovo said it was making progress in a restructuring that would improve profits.